While the entire crypto community is eying over the spot Bitcoin ETF approval, the crypto market has shown subtle volatility over the past few weeks.
Since the ETF approval will be a major milestone for the space, it has withheld a huge upswing for the entire cryptocurrency market, potentially to be followed by a massive pump in Bitcoin price.
The U.S. SEC has a deadline of January 10 to decide the filings of the first spot Bitcoin ETF of ARK 21Shares.
This move from the agency is much awaited and closely watched by most finance players as it will also decide the fate of dozens of other Bitcoin ETF applications from numerous asset managers, including BlackRock, Fidelity, Grayscale, and others.
The spot Bitcoin ETF approval is considered a “big event” for the crypto space as it will help move the industry closer toward mainstream finance by forming a bridge between Bitcoin and the finance market.
If approved, it is expected to bring – if not billions – at least several hundred million dollars in Bitcoin as soon as the news is spread. There will also be huge BTC buying from ETF issuer institutions as they will need Bitcoin in their fund portfolio to offer trading.
According to several analysts, this buying will lead Bitcoin’s price to record highs, and breaking its all-time high is inevitable.
This article will help you comprehend how the Bitcoin ETF approval decision could spread euphoria and bring ten-fold profits for crypto investors.
How The ETF Hype Is Currently Affecting The Market
Considering the ETF hype, it can severely shake the cryptocurrency market either way, whether it gets approved or not. It has already made some significant marks on the market.
Boost in Network Activity
The ETF anticipation has undoubtedly driven astonishing activity on Bitcoin, Ethereum, and other leading blockchain networks. It essentially has contributed to the spike in Bitcoin fees, which has risen significantly since October.
A similar scenario was also seen in the previous bull run when the BTC price surged to over $50,000 in April 2021 and later touched an all-time high of $67k in October 2021, according to BitInfoCharts data.
However, some intellectuals affirm that the recent hike is also attributed to the emergence of Bitcoin inscriptions, which have gained wide popularity.
Pre-ETF Inflows
Besides the upcoming capital inflow from traditional finance, a notahase sum of money has been injected into the current market for the past few months.
A recent report from CoinShares noted that 2023 recorded the insertion of over $1.9 billion in Bitcoin products, which majorly came during the second half of the year after the Bitcoin ETF applications started to file.
These funds, however, are likely to be taken out in the upcoming days as they reportedly come from seasoned traders, particularly those seeking short-term profits, who are seemingly boosting the inflow to catch the potential opportunity and gain maximum benefits out of it.
As the market is expected to continue to move upward, most of the forecasting reports have given mixed responses for the post-ETF approval movements.
Expected Market Movements After Bitcoin ETF is Approved
January 10 will be a historic day for crypto enthusiasts as the SEC’s decision on spot Bitcoin ETF will decide the market sentiment for the next few years.
Bitcoin Price
One of the most direct results of spot Bitcoin ETF approval will be a spike in Bitcoin (BTC) price. According to several analysts, the ETF approval will likely lead the Bitcoin price to reach a new all-time high within days.
These forecastings have set different targets for Bitcoin price, as some say it will surpass $100,000 while others expect it to hardly touch its previous high of nearly $67,500 by the time the ETF comes to market.
Among different predictions, one thing is for sure: BTC price will inevitably hit $50,000 as it has already neared $47,000 on January 9, a day before the deadline – according to data from Coinmarketcap.
Additionally, Bitcoin price can also sustain these recent gains throughout the next couple of months as the next Bitcoin halving is also nearing.
The next and fourth halving event is due in April 2024, and as it is usually considered a bullish sentiment, it’s reasonable to say that Bitcoin’s price might continue to gain through the next few months.
Another reason supporting the Bitcoin price surge is BTC supply and demand dynamic changes in the current market. While institutions might have liquid BTC in their portfolio, they will still need to have a large chunk of BTC supply to enable the underlying ETF trading, thus increasing asset demand.
In addition, several reports also cited that BTC supply held on crypto exchanges has fallen to its lowest since the past five years.
It means that investors have moved their BTC off the exchange and are interested in long-term holding, which eventually creates a strong demand for BTC among traders on crypto exchanges.
Bitcoin soared over 15% in days after the SEC approved the first future Bitcoin ETF, marking an all-time high in December.
If we compare future ETF with spot ETF, the spot Bitcoin ETF holds a much higher potential to push BTC upward as it will directly impact Bitcoin price, unlike future ETF, which externally fetches BTC price for future contracts.
Advantages of Crypto Market
If the ETF gets approved, the most probable move is a sudden boost in Bitcoin price, which all major crypto assets will follow. This price rally is believed to lead Bitcoin (BTC) towards a new all-time high while it will be accompanied by Ether (ETH) with a massive boost in its DeFi ecosystem.
This also happened when Bitcoin reached its all-time high in October 2021, and all other crypto assets broke to new highs.
However, on the negative side, the price movement could also hit the opposite and crash down as investors will supposedly rush to cash out from Bitcoin.
On the odds, this move could also benefit the crypto ecosystem as the outflow will optionally find its way to other crypto projects.
Really a “Sell on the News” Scenario?
As several predictions are supporting the price rally, some so-called ‘giga-brains’ are also believing that the ETF approval will be more of a “sell on the news” event.
The claim is evidently supported as Bitcoin price has rallied over 60% since October based on several expectations such as an FED rate cut and an upcoming halving but it was majorly fueled by the ETF news.
In addition, Bitcoin also rallied from $25,000 to $30,000 in June with a sudden rush when the world’s largest asset manager BlackRock filed for the spot Bitcoin ETF. So those investors might be actively seeking to exit their position with a healthy profit.
However, some of the crypto natives have also predicted a massive correction in Bitcoin price by March as the BTC ETF hype has already accomplished the retail inflow it was meant to attract in the past months. Based on all these analyses, it’s unclear to perfectly predict the Bitcoin price movement either way.
Also Read : 5 Reasons to Invest in Bitcoin in the Year 2024
Final Words
As the largest cryptocurrency, Bitcoin has always been at the center of attention in the crypto market and its spot ETF approval is probably the biggest milestone for the whole crypto industry.
Whatever decision the SEC shares on January 10, it is likely to shake the market. Since the ETF-saga is expected to go on further, as other issuers are also waiting for their application approval, Bitcoin and other cryptocurrencies will continue to show volatility consequently.
FAQs
1. When will the Blackrock Bitcoin ETF be approved?
Answer. The SEC has a decision date of January 15 for BlackRock’s spot Bitcoin ETF, however, it is not the final deadline and can be pushed to March.
2. When will the Bitcoin spot ETF be approved?
Answer. The first spot Bitcoin ETF is expected to be approved on January 10 as the SEC has a deadline on the day to make either decision for ARK Investment Management and 21Shares’ ETF.
3. Did the Bitcoin ETF get approved?
Answer. The SEC approved Bitcoin futures ETFs in 2021 while the agency is yet to approve Bitcoin spot ETFs. The first spot Bitcoin ETF is expected to be approved on January 10.
4. How many Bitcoin ETF applications are filed?
Answer. Currently, there are a total of 11 spot Bitcoin ETF applications filed to the SEC by asset managers including BlackRock, Fidelity, VanEck, ARK-21Shares, Grayscale, Bitwise, Franklin Templeton, Valkyrie, Hashdex, Invesco Galaxy, Wisdomtree.
5. How will Bitcoin ETF affect BTC price?
Answer. The approval of spot Bitcoin ETF is expected to bring a massive spike in BTC price as it will enable traditional finance players to easily access and invest in Bitcoin. A strong demand for Bitcoin among investors will result in higher market prices.
6. When will the SEC decide on Bitcoin ETF?
Answer. The SEC will share its final decision on spot Bitcoin ETF on January 10. Several analysts believe that there are 99% chance of the SEC approving Bitcoin ETF on January 10 which is the final deadline.
